All_Steels_Trading_Limite - Accounts

The directors present the strategic report for the year ended 31 December 2021.

We aim to present a balanced review of the development and performance of the business during the year and its position at the year end. Our review is consistent with the size and non-complex nature of our business and mindful of the risks and uncertainties we face.

The business review has been prepared solely to provide information to shareholders as a body to assess the Company’s strategies and the potential for those strategies to succeed. The review should not be relied on by any other party or for any other purpose.

The business’ principal customers are steel stockholders where the main risk is any significant reduction in steel demand and a deterioration in steel prices. There is also the underlying problem of uncertainty created by both EU/UK Safeguard quotas and the longevity and impact of the Covid-19 pandemic.

The Company continues to insure its trading debts through QBE.

The Company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged on order to fix the cost in sterling. The hedging activity involves the use of foreign exchange forward contracts.

We consider that our key performance indicators are those demonstrating our financial performance and strength of the Company as a whole, being turnover, gross margin and net assets.

The Company achieved a remarkable result in respect of sales volumes and profitability in what was effectively the first, full economic recovery year as the pandemic impact minimised. This was also achieved in a trading environment that remained constrained by both post Brexit uncertainties and EU/UK Safeguard quota measures, exacerbated by congestion in our national ports and a real shortage of general haulage.

From the outset of the year, demand was strong as virtually all distributors started to replenish stock and the scalability of our business model was clearly demonstrated as it quickly adjusted to satisfy and capitalise on the increased trading opportunities.

Gross profit margins more than doubled the 2020 performance and this resulted in an exceptional profit before tax of £18.5 million. Turnover advanced by £36.3 million on the 2020 results and this was in part attributed to a surge in steel prices as demand outstripped supply for most of the year. In addition to the benefits of rising market prices, the enlarged turnover was also achieved through good organic growth in sales volumes with the established customer base and by adding a healthy number of sales to new accounts that included the entry into new market sectors.

A vital contribution to the success of 2021 was the management of stock and steel purchases. In the aggressively rising market, the business cautiously managed the stock position, minimising the risk of the impact of rising prices whilst making judicious purchases when opportunities arose. This has culminated in the cost of stock held at the end of the year presenting an opportunity to maintain the recent trend of higher gross margins into the early part of 2022.

To navigate the quota restrictions the business continued to switch more purchases to domestic supply, which also helped to eliminate other risks typically associated with the import of bulk shipments whilst also helping to reduce lead times on deliveries. Distant import supply however continued to be the only option on several key products where quarterly UK Safeguard quota measures remained in force. Hence the business was again required to strategically purchase non-EU material to avoid potential 25% import duties as quota availability was continually exhausted on those products after the first trading month of each new quarter.

Even with the peak stock volumes we managed to keep to our plan of consolidating stock at our Groveport facilities, which significantly helped to simplify operations, although the port did struggle with the quick rebound in demand due to both labour and HGV shortages. Groveport also commissioned a new computer system in July that caused some disruption although this should enhance our system interface in 2022, further streamlining our working processes. We also secured additional warehousing space at Groveport to complement our extended warehouse increasing our total undercover storage footprint to 375,000 square feet. The advantages of this dedicated long-term portside facility really shone through during the year allowing continuous feed of supply to our customers at controlled costs whilst a number of our competitors scrambled for what little national dock space that was available at exuberant charges. All our warehousing and logistics for 2022 continues to be contracted out to PD Ports, which remains a long-term partner under the framework of a storage and logistics contract.

The outlook for 2022 is positive. We have a greatly simplified business with stock and distribution now consolidated at Groveport and with the new IT advancement this will result in quicker automated administration creating efficiency gains. Sales volumes and profitability during the opening months are expected to be strong and maintain recent trends. We also have the benefit of a very solid sales forward order book. As mentioned last year competition has diminished and whilst some of the larger corporate businesses have the financial means to deal with the increasing steel prices, the lack of dedicated port space will be an undermining factor that will suppress many of our competitors’ activities. Following the recent surge in energy costs, steel producers have been forced to significantly increase prices again, which should underpin profit opportunities off the back of our lower priced stocks.

During the year the Company acquired a property in Scunthorpe that at the year end was in the process of being developed to be able to provide additional warehousing space to further improve logistics. This is anticipated to be in full service during 2022.

The major challenge immediately facing the Company is that the high prices will keep the pressure on financial resources with regard to stock levels and insured credit limits of our customers. We will also have to remain vigilant to higher levels of debt within the supply chain and our customer base as Covid-19 related loans start being repaid. In the main our stockholding customers will have enjoyed a profitable year off the back of their own stock windfalls, but the problems are likely to be downstream as we believe that debt will have accumulated, combined with the added complication of such customers having to adjust to the very high steel costs.

The high price of steel also creates its own environment of risk as any weakening in demand could lead to steel price deflation and stock losses although this is not envisaged in the short term.

The high prices will keep pressure on the Company’s financial resources. The financial forecasts have been reviewed and sensitised and these show the Company remaining profitable and trading within borrowing facilities. The Company retains the support of HSBC and are pleased to confirm that the facilities are sufficient to meet the anticipated requirements for the forthcoming year. Based on the detailed forecasts, healthy current trading position and this continued support, the directors are confident that the company will remain a going concern.

On balance the directors remain optimistic about the new trading year. We also believe that the business remains very well positioned with what is now an established, professional team and very strong supplier and customer relationships that firmly form the foundations for the business’ sustained success.

The remarkable result in 2021 would not have been achieved without the great effort, energy and commitment of the Team and Associates at All Steels Trading; the directors would like to thank all personnel involved for their professionalism and resolute efforts throughout a challenging and demanding year.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2021.

The principal activity of the Company during the year was the procurement and wholesale of general structural steels.

The results for the year are set out on page 14.

The trading profit before tax was £18.53m (2020: £2.76m).

Interim dividends were paid amounting to £4,100,000. The directors do not recommend payment of a final dividend.

The total distribution of dividends for the year ended 31 December 2021 was £4,100,000 (2020: £1,625,000).

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The Company’s principal foreign currency exposures arise from trading with overseas companies. Company policy permits but does not demand that these exposures may be hedged in order to fix the cost in sterling. This hedging activity involves the use of foreign exchange forward contracts.

Saffery Champness LLP have expressed their willingness to continue in office.

We have followed the 2019 HM Government Environmental Reporting Guidelines. We have also used the GHG Reporting Protocol – Corporate Standard and have used the 2021 UK Government’s Conversion Factors for Company Reporting.

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee.

The Company has on site electric car charging points to encourage staff to purchase private electric cars. There are plans to increase the capacity of this offering going forward.

The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of information on future developments and the directors regard to the need to foster the Company's business relationships.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the Company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the Company’s auditor is aware of that information.

During 2021 the business again selected The Prince’s Trust as its main vehicle for charitable donations. Each four year cycle commitment totals £100,000 that is supporting 100 young people to go through The Trust’s training and education programme to get into employment. Such a commitment continues to award the business with a patronage status of The Prince’s Trust.

The Company made further charitable donations to local charities along with sponsoring an employee to climb Kilimanjaro, also in aid of The Prince's Trust.

Section 172 statement

The Company recognises the importance of delivering effective corporate governance to support the success and sustainability of the business in the long term. The members of the Board offer a broad range of technical and industrial experience as part of the decision making process.

Training

The directors are aware of the importance of undertaking regular and ongoing training to support regulatory requirements. There is currently an informal induction process for new directors, with presentations and materials delivered as part of the induction process. During the reporting period, due to the restrictions introduced with the Covid – 19 regulations, opportunities to follow training programmes were not possible, but going forward, it is anticipated that a regular and ongoing directors training programme will be developed to support broader regulatory requirements, cascaded to senior managers as required.

Board meetings

The Company holds regular meetings throughout the year and is supported by management and various departmental divisions providing timely and detailed information in support of the Board’s decision making. The Board operates an agenda of items appropriate to the size and complexity of the business. Items requiring Board approval are clearly defined and will include; new bank facilities, investment proposals, including acquisitions and disposals, and significant changes to the way health and safety is managed and monitored. The Board receives monthly reports on the operating and financial performance of the business including current and forecast financial information in order to assist in making informed decision-making and strategic planning. The Board ensures that appropriate policies are in place in relation to matters including anti-slavery and human trafficking, anti-bribery and corruption and the Company’s tax strategy.

Decision making

Where appropriate the Board will consult with professionals or other organisations to assist with decision making and help consider the likely consequences of the decision in the long term. The interests of all key stakeholders including the Company’s employees, suppliers, customers and the wider community are considered as part of the decision-making process. The Company actively engages with key stakeholders through employee, customer and supplier feedback in the form of surveys and one-on-one meetings.

Principal decisions

Principal decisions are undertaken by the Board following a thorough review process to take account of stakeholder and operational benefits to the business.

Culture

The Company’s culture combines a family business ethos with a commitment to high quality across everything we do including corporate governance and general business conduct. The Company’s relationships with its stakeholder community are central to this.

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

•     make judgements and accounting estimates that are reasonable and prudent;

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;

•     prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of All Steels Trading Limited (the 'company') for the year ended 31 December 2021 which comprise the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

•     give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report and the directors' report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

•     adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

•     the financial statements are not in agreement with the accounting records and returns; or

•     certain disclosures of remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the directors' responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and by updating our understanding of the sector in which the company operates.

Laws and regulations of direct significance in the context of the company include The Companies Act 2006 and UK Tax legislation.

Audit response to risks identified

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.

Use of our report

This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members, as a body, for our audit work, for this report, or for the opinions we have formed.

The income statement has been prepared on the basis that all operations are continuing operations.

All Steels Trading Limited is a private company limited by shares incorporated in England and Wales. The registered office is Vulcan House, York Road, Thirsk, North Yorkshire, YO7 3BT.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention, modified to include the revaluation of freehold properties and to include investment properties and certain financial instruments at fair value. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

The financial statements of the company are consolidated in the financial statements of All Steels Trading Holdings Limited. These consolidated financial statements are available from its registered office, Vulcan House, York Road, Thirsk, North Yorkshire, England, YO7 3BT.

At the time of approving the financial statements, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future.true

The financial forecasts have been reviewed and sensitised and these show the Company remaining profitable and trading within borrowing facilities. The Company retains the support of HSBC and are pleased to confirm that the facilities are sufficient to meet the anticipated requirements for the forthcoming year. Based on the detailed forecasts, healthy current trading position and this continued support, the directors are confident that the company will remain a going concern.

Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.

When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.

Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer (usually on dispatch of the goods), the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the entity and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.

At each reporting period end date, the company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Stocks are stated at the lower of cost and estimated selling price less costs to sell, which is equivalent to net realisable value.

At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the company's statement of financial position when the company becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Basic financial assets, which include debtors, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets at the lower of the assets fair value at the date of inception and the present value of the minimum lease payments. The related liability is included in the statement of financial position as a finance lease obligation. Lease payments are treated as consisting of capital and interest elements. The interest is charged to profit or loss so as to produce a constant periodic rate of interest on the remaining balance of the liability.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Provision is made for bad and doubtful debts and obsolete stock. These provisions require management's best estimate of the recoverability of trade debtors and the expected future use of stock.

An analysis of the company's turnover is as follows:

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 4 (2020 - 3).

The directors' remuneration figure for 2020 included above has been corrected from the amount previously reported of £615,660.

As described in accounting policy 1.8 and further in note 12, derivative forward currency contracts are measured at fair value by reference to the relevant forward exchange rates at the year-end, with the movement taken through profit and loss, as presented above. The contracts mature within 5 months of the year-end. The directors consider that the criteria for adopting hedge accounting as set out in FRS102 have not been met in relation to the contracts in place at the year-end and thus the fair value of the corresponding hedged items has not been measured.

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The company enters into forward foreign currency contracts to mitigate the exchange rate risk for certain foreign currency payables. At 31 December 2021, the outstanding contracts all mature within 5 months (2020: 7 months) of the year end. The Group is committed to buy US$10,800,000 (2020: US$14,800,000), and sell US$450,000 (2020: US$350,000) and buy and sell €nil (2020: €2,000,000 ) and pay/receive a fixed sterling amount.

The forward currency contracts are measured at fair value, which is determined using valuation techniques that utilise observable inputs. The key inputs used in valuing the derivatives are the forward exchange rates for GBP:USD and GBP:EUR. The fair value of the forward-foreign currency contracts is an asset of £148,572 (2020: liability: £415,850). The directors consider that the criteria for adopting hedge accounting as set out in FRS102 have not been met in relation to these contracts and thus the fair value of the corresponding hedged items has not been measured.

Bank borrowings are secured by a debenture dated 16 April 2010 including a fixed and floating charge over all assets of the company.

Finance lease payments represent rentals payable by the company for certain items of plant and machinery. Leases include purchase options at the end of the lease period, and no restrictions are placed on the use of the assets. The average lease term is 1.75 years. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. The leases are secured over the assets to which they relate.

Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:

During the year beginning 1 January 2022 the net reversal of deferred tax liabilities is expected to increase the corporation tax charge for the year due to the reversal of accelerated capital allowances.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

Each ordinary share has voting rights, rights to dividends and to participate in a distribution.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

Amounts contracted for but not provided in the financial statements:

During the year the company entered into the following transactions with related parties:

The following amounts were outstanding by related parties at the reporting end date:

The following amounts were outstanding by related parties at the reporting end date:

Interest of £5,131 (2020: £5,276) was charged in the year on amounts due from related entities. Interest of £52,193 (2020: £nil) was charged in respect of overdue sales from related entities.

The company occupies a property owned by a pension scheme set up for the benefit of one of its directors. During the current year, rent of £42,500 (2020: £42,500) was paid to the pension scheme in respect of this property.

The immediate and ultimate parent company of All Steels Trading Limited is All Steels Trading Holdings Limited, a company registered in England and Wales. All Steels Trading Holdings Limited prepares group financial statements which include the results of All Steels Trading Limited. The registered office of All Steels Trading Holdings Limited is Vulcan House, York Road, Thirsk, YO7 3BT.

Laurence McDougall is the ultimate controlling party by virtue of owning the entire issued share capital of All Steels Trading Holdings Limited.